How To Conduct A Successful Post-Merger Integration

 

Most business leaders think that mergers fail because of bad strategy or overpaying. But according to former senior partner at McKinsey and Harvard Business School’s David Fubini, that’s not where deals break down. They fail in what comes during and after integration. 

More specifically, “Integration is what makes or breaks the success of a deal. Not design, not financing, not due diligence, not negotiations of structure,” says Fubini. “Because no matter how expertly you manage these elements, if you can’t bring all the pieces together, all your efforts might as well have been an academic exercise." 

Fortunately, in his new book, Post-Merger Integration: Building The Mindset, Skills, And Discipline Needed For Deal Success, Fubini (along with Patrick Sanguineti) offers a behind-the-scenes look at how deals actually succeed and where they go wrong. And he shows leaders how to develop an Integration Mindset that will enable you to navigate the complex, nuanced reality of bringing two organizations together successfully. 

The book skips the rigid playbooks and generic frameworks, choosing instead to serve as your trusted advisor. Fubini guides you through the critical considerations and generative questions that lead to tailored solutions for your deal. Through real-world case studies spanning staggering successes to disappointing failures, Fubini exposes the common traps that derail integrations and illuminates the foundational truths that define today's Merger and Acquisition (M&A) champions. You’ll learn: 

• Why copy-paste integration approaches inevitably fail and how to create bespoke strategies that account for every deal's unique nuances.
• How to maintain laser focus on your deal rationale throughout the integration process, avoiding the trap of competing priorities.
• Practical frameworks for developing decisive leadership at every level of your merging organization.
• Proven methods to identify and overcome the endemic traps that cause even experienced leaders to stumble.
• Strategic approaches to bridge the knowing-doing gap and turn integration plans into realized value. 

Additionally, Fubini says that when choosing the person to lead your integration to ensure that the integration is handled according to plan, be sure that person has as many of the following qualities as possible: 

• Outstanding attention to detail.
• Superb team and talent management skills.
• Empathy to help anticipate how decisions will affect different groups of people (and to proactively develop the appropriate measures).
• Cultural adaptability and rapport-building.
• Strong cultural assessment and mapping skills.
• The ability to develop focused and effective internal and external communications plans.
• Friction mitigation skills to productively deal with the unexpected and the frictions it can create.
  

Whether you're a C-suite executive planning your next acquisition, a VP or director tasked with integration leadership, or a consultant supporting M&A efforts, Post-Merger Integration equips you with the mindset and skills to transform paper value into actual results. 

David Fubini

 
Fubini shares these additional insights with us: 

Question: What is the most important thing a leader can do to earn the trust and respect of the employees of an acquired company? 

Fubini: Leaders need to model the behavior and values they want the combined organization to embody. By continually walking the walk, leadership not only serves as clear beacons, but also concretely demonstrates to acquired employees that they are approaching integration genuinely. Some acquired employees may not fit the desired culture––a perfectly natural reason to part ways––but even in such a case, those employees should still be able to respect management’s real commitment to what they’re espousing through the integration effort.

At the same time, leaders throughout the organization should commit to “promoting the process”––engaging employees in clear communication about what actions are being taken and how it fits into the bigger picture. This is about demystifying some of a high-anxiety period as it is showing respect to employees by keeping them involved and helping to minimize surprises.

Question: Once a leader realizes an acquisition/merger is going astray, what important actions can he/she take to help course-correct? 

Fubini: This is a tough one, because it really depends on what it is that’s going wrong––and everything can. Like a used car, you never really know what’s “under the hood” until you have full ownership and have some time on the road. 

That said, any attempt at triage must start with a diagnosis: for example, is the issue because we’re straying away from our deal rationale, or is it that the rationale needs a fundamental re-adjustment? 

Depending on the severity and nature of the problem, you may need to appoint a leader outside the existing integration governance and give them the authority to conduct a focused effort to get things under control. They should identify the “flight risk” employees as quickly as possible and be transparent with them about what’s not working, what leadership is doing about it, and the important role this group must play in the recovery and the org moving forward. 

There should likely be some degree of communication with key external stakeholders to take accountability and control of the narrative. Planning targets will likely need to be revised around the turnaround and focused on much shorter milestones. 

Question: What is the one thing that most often goes wrong that sabotages a merger and why does this happen? 

Fubini: There are really two big issues, the first being that the underlying base business loses focus and momentum. This often occurs because of the gravitational pull of the integration effort: everyone is focused on bringing the two companies together and “business as usual” targets are (often unintentionally) given less priority. This is a killer because the success of the integration effort relies on the fundamental health of the business––everyone needs to keep hitting their targets in order to achieve the synergies that the deal was built around. 

The other killer is culture. Too often, leaders fail to develop a grounded sense of each organization’s cultural reality––how they make decisions, how they communicate, how they incentivize and compensate employees––and presume that the two sides will fit together because of the similarity in their cultural statements. Critical differences then emerge once integration work is underway. This can do more than slow things down at a time when tempo is critical: it can create real animosity that takes years to recover from and destroys much of the value that the deal was meant to create.
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Fubini is a Senior Lecturer at Harvard Business School in the Organizational Behavior Unit. He is the faculty chair of the Leading Professional Services Firm program and a core faculty member of the Mergers & Acquisitions and Board of Directors programs within the school’s Executive Education offerings. 

He spent 34 years at McKinsey & Company, where he was a Senior Partner, Managing Director of the Boston office, and co-founder of its Merger Management Practice. During his tenure, he advised global clients on complex mergers, organizational transformation, and large-scale integration efforts, helping lead some of the firm’s most significant client engagements in these areas. 

He is the author of Hidden Truths; Mergers, Leadership Performance, & Corporate Health; and Let Me Explain, a biography of his father, Eugene Fubini. 

Sanguineti is a Research Associate at the Harvard Business School, where has co-authored thirty business cases. His own research focuses on religion and migration in modern Japan. He received a BA and MA from Harvard University and a MPhil from the University of Cambridge. 

Thank you to the book’s publisher for sending me an advance copy of the book.